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Article Courtesy of The
Palm Beach Post
By Mike Diamond
Published March 6, 2024
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The homeowners association for Valencia Sound near Boynton Beach has refunded
nearly $100,000 to recent buyers who were improperly charged a $5,140 "capital
contribution fund by the HOA."
The refunds were the result of a recent settlement of a lawsuit brought by GL
Homes, which sued the HOA for charging its buyers the $5,000 when the rules,
adopted by the homebuilder, barred such a fee from being levied.
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The lawsuit, filed Dec. 27, was settled Jan. 30. The settlement terms were not
made part of the court record but The Palm Beach Post has learned that GL Homes
got what it wanted: a refund of the money to the buyers who bought directly from
GL Homes. About 20 people were affected.
“We are just trying to do right by our people,” said Steven Helfman, general
counsel for GL Homes, at the time the lawsuit was filed. “This is not really a
benefit to us. It is a benefit to these buyers who never expected to pay that
money. None of our other buyers paid it."
How do capital contribution fees work?
Almost all HOAs in the county impose an upfront payment of HOA maintenance fees
as a way to pay for capital improvements. But by the time the HOAs get around to
imposing the fee, the homebuilder, in most cases, has sold all of its homes.
The one-time fee is usually the quarterly maintenance fee. At Valencia Sound,
with homes often selling for well over $1 million, the HOA made the fee equal to
two quarterly maintenance fees, or $5,140. Buyers of GL Homes had to pay that
amount at closing. |
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The HOA at Valencia Sound, located off Lyons Road
west of Boynton Beach, has refunded nearly $100,000 to buyers of GL
Homes who were charged a capital contribution fee by the HOA that GL
Homes said could not be charged. GL Homes filed a lawsuit, which was
recently settled.
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At
Valencia Sound, the HOA moved quickly to impose the capital contribution fee
once it assumed control of the development from GL Homes last April. At issue
was that it did not exempt those buyers who bought remaining homes from GL
Homes.
"Just because these people bought after we turned over the HOA does not mean
they should pay that fee,” Helfman said last month after the suit was filed in
circuit court. He noted that he warned the HOA that it was improper to collect
the capital contribution fee from its buyers.
Efforts to obtain comment from the Valencia Sound HOA were unsuccessful. The
653-unit development is nearly sold out. Only a few homes are still available
for sale through GL Homes.
With the settlement of the lawsuit, there is no legal challenge to the fee being
imposed on resales. Had the case gone to trial, the fee itself could have been
wiped out because the the lawsuit contended the way in which the fee was adopted
was wrong.
Valencia Sound HOA near Boynton Beach moved quickly to impose the $5,000 fee
GL Homes began building the development more than four years ago. The new HOA
board, with approval of homeowners, adopted the capital contribution rule in
August. “We have never seen an HOA try to do this on our buyers. I’m not sure
any other HOA has done it," Helfman said.
Joshua Gerstin, a Boca Raton lawyer who specializes in HOA law, said he was
surprised that the HOA went ahead and collected the fee from buyers who bought
directly from GL Homes, especially when GL Homes warned that it was improper.
"I cannot imagine their attorneys telling them that they could do that," Gerstin
noted. "GL wrote the rules, and it had to be clear that such a fee could not be
levied against their buyers."
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